My sister and I inherited $75K in old savings bonds from our dad who died over 15 years ago. There was no will or executor of estate she had nothing. My sister is in California and has always been poor. She is getting cancer treatments from Medicaid and other California issued services. Our issue is this. If we cash the bonds and her half goes to her, will the State of California know she received this income and will they make her pay back Medicaid assistance? If so, if she moved to Texas for treatment first before receiving the bond money and becomes a resident, will she be able to skip being responsible for paying back any of this inheritance because Texas is a tax free state?
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Having said that. How old is your sister? If she's under 55 then she doesn't have to pay anything back for medicaid. If she's over 55 then she might. Is she in any form of long term care like a nursing home. Only long term care is recovered under expanded medicaid.
Regardless, what that infusion of money may do is bump your sister off medicaid. So it's best not to do it in one big clump. Do it partially ever year so that you sister stays under the medicaid income limit.
I'll leave aside the question of whether the bonds are in your name or your dad's name that someone asked. That's another can of worms.
As always, I'm clueless. None of this should be considered advice. I'm just rambling as I eat dinner. I don't even know what I am saying. What year is this?
$ 75k total? & did you actually look them up on TreasuryDirect to determine the payout? & have you looked at the forms and documents required by TreasuryDirect in order to get the $? There’s like going to be forms that will have to be filled out with names, SS#. It’s all reportable.
but a more involved issue will be if they are in your dads name.
So are they in his name & he was TX resident?
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My understanding is that you cannot escape Medicaid recovery by skipping the state. Although the bond revenues may not be taxed in Texas, California still has a right to recoup any monies it can against what it has spent on your sister's care. You really need to consult an attorney or two (in the different states) but I know TN courts have ruled that Medicaid recovery can be made even from assets gifted in a will. Settle this right or you may find the state of California (and maybe the IRS) coming after you for tax evasion and/or fraud. You cannot legally cash the bonds in your name only and then either keep all the proceeds or sneak monies to your sister under the table.